IRFC to fund up to ₹20,000 crore for construction of Vadhvan Port

By Admin

28 Oct, 2025

In a major boost to India’s maritime infrastructure, the Indian Railway Finance Corporation Ltd (IRFC)  the financing arm of Indian Railways  is set to sign a memorandum of understanding (MoU) with Vadhvan Port Project Ltd to provide funding of up to ₹20,000 crore for the construction of the ambitious Vadhvan Port in Maharashtra.

A Mega Port with Global Potential
The Vadhvan Port, estimated to cost ₹76,220 crore, is designed to handle 298 million tonnes (mt) of cargo annually, including 24.5 million TEUs of container traffic. Once completed, it will be one of India’s largest and most modern deep-draft ports, significantly enhancing the country’s maritime trade capacity and connectivity with global shipping networks.

Strategic Financial Partnership
According to reports, IRFC has shown strong interest in financing the mega project. “If they are ready to give money at 7–7.2 per cent, that’s the best option, because even if we go outside, it will cost us around that much. So, instead of borrowing from elsewhere, we can use a PSU to fund the project,” said a person familiar with the development. The MoU is expected to be signed during India Maritime Week, which begins on October 27 in Mumbai. The project will start drawing funds from 2027, after the equity portion is fully utilised.

IRFC’s Expanding Role in Infrastructure Financing
As a Navratna public sector enterprise, IRFC has been diversifying beyond railway financing. With Indian Railways now receiving the bulk of its rolling stock funding through Gross Budgetary Support (GBS), IRFC is expanding into broader infrastructure domains  financing ports, power plants, coal mines, and rail links that connect these facilities to the Dedicated Freight Corridor (DFC).

Competitive Interest Rates to Support Growth
IRFC plans to offer funding at rates lower than those of Power Finance Corporation (PFC) and REC Ltd, aiming to make infrastructure investment more cost-effective. “IRFC is trying to mobilise funds as cheaply as possible and channel them into infrastructure projects with minimal margins because, ultimately, reducing financing costs is crucial to making infrastructure investment viable,” a source revealed.

In May 2025, IRFC raised ₹3,000 crore from the domestic debt market through five-year bonds at a record low coupon rate of 6.65 per cent, highlighting its financial strength and market credibility.

Collaborative Funding Approach
Other potential financiers for the Vadhvan Port Project include Japan International Cooperation Agency (JICA), PFC, and REC, all of whom have already signed MoUs with Vadhvan Port Project Ltd, the special purpose vehicle (SPV) implementing the project.

Driving India’s Maritime Future
The upcoming Vadhvan Port is poised to play a crucial role in India’s maritime growth strategy. With IRFC’s significant financial support and partnerships with global and domestic lenders, the port will not only enhance cargo handling capacity but also bolster India’s position as a key player in the global shipping and logistics network.